No-frills airline whose business is booming

Michael O’Leary, chief executive of the European budget airline Ryanair, was discussing his new scheme to charge passengers to go to the bathroom.

Most passengers — the “discretionary toilet visitors,” as he calls them — would eventually forgo in-flight bathroom use altogether, he predicted. Which is good, because he would also like to reduce the number of bathrooms per plane, to one.

What if the plane were stricken by some nasty, effluent illness, like food poisoning? A snorting noise wafted over from the chair where O’Leary was sitting. “We don’t serve enough food for everybody to get food poisoning,” he said.

At 48, the quick-talking, blue-jean-wearing O’Leary is one of the most successful businessmen in Ireland, presiding over an airline that is, remarkably, flourishing in a brutal climate for airlines. He is known for thick-skinned aggression, outrageous public statements and an implacable belief that short-haul airline passengers will endure nearly every imaginable indignity, as long as the tickets are cheap and the planes are on time.

“Soon he’ll be charging us for oxygen and number of limbs,” ‘The Sun’ groused in a column in June, when he unveiled his latest proposal — getting people to carry their own bags to the plane.

O’Leary revels in his persona as national pugilist and provocateur, alternately charming and offending. He once dressed as the pope to advertise Ryanair’s new route from Dublin to Rome. He has declared that fat people should pay more for their seats, but that it would take too long to weigh them at the airport. And, at a news conference to discuss the possibility of starting trans-Atlantic flights, he suggested — to the consternation of the young woman gamely translating his remarks into German — that business-class customers would receive oral sex.

Method in madness

O’Leary may sometimes seem as if he is throwing out insane suggestions for their shock value. But in private, he is known as a tough negotiator whose canny timing and sharp elbows help him extract favourable deals, as when he put in a huge order for new planes when the market collapsed, after the Sept 11 attacks.

His avowed enemies include unions (his workers are not unionised), politicians who impose airport taxes, environmentalists, bloggers who rant about poor service, travel agents, reporters who expect free seats, regulators who thwart his plans and airport owners like BAA, whom he once called “overcharging rapists.”

There is method in all this, it seems.

Insulting, or, ‘slagging off,’ as they say here, “the BAA and the British government and the rest is all designed to send strong signals to everyone who deals with Ryanair that you’re not going to get away with anything,” said Joe Gill, director of equity research at Bloxham Stockbrokers in Dublin.

Ryanair flies more than 850 routes across Europe, often to obscure airports far away from big cities — “from nowhere to nowhere,” in the scoffing words of Sir Stelios Haji-Ioannou, who runs the competing airline EasyJet. Ryanair’s post-tax profit fell by 78 per cent in the year that ended in March, but still amounted to $149 million. While most carriers are hemorrhaging passengers, Ryanair expects its passenger numbers to increase, to 68 million this year from 57 million in 2008.

The mystery is why so many people are willing to put up with an airline that, in the words of ‘The Economist’, “has become a byword for appalling customer service, misleading advertising claims and jeering rudeness towards anyone or anything that gets in its way.”

“Nobody helps you — it’s as simple as that,” said Malcolm Ginsberg, editor in chief of the travel newsletter aerbt.co.uk, describing what happens to Ryanair passengers who need assistance at the airport.

That is not the point, O’Leary said in a recent interview. “Our customer service is unlike every other airline, which has this image of, ‘We want to fall down at your feet and you can walk all over us and the customer is always right,’ and all that nonsense.”

By contrast, O’Leary continued, Ryanair promises four things: low fares, a good on-time record, few cancellations and few lost bags. “But if you want anything more — go away!

Will we put you in a hotel room if your flight was cancelled?” O’Leary asked rhetorically.

“No! Go away.”

During the interview, he began riffing on the theme of when Ryanair grants refunds, which is never.

“Will we give you a refund on a nonrefundable ticket because your granny died unexpectedly?” he asked. “No! Go away. We’re not interested in your sob stories! What part of ‘no refund’ do you not understand?”

Extra for anything extra

Miss your flight because you had to wait too long at a Ryanair help desk? Too bad! Your luggage is slightly overweight? Throw away the excess, or wear it on the flight! Try to tote your duty-free purchases onto the plane in a shopping bag, when you already have a carry-on bag? Prepare to fork over $40 at the gate.

Ryanair’s fares are only 40 euros, or $56, on average. O’Leary just announced that he would sell one million seats for 5 euros apiece this fall. The airline offsets this with money from deals with hotels, car-rental services, and other partners, along with fees for everything from airport check-in ($56) to online check-in ($7).

O’Leary runs a tight ship in his office, too. Post-it notes and highlighters are banned.

Executives bring in their own pens. To illustrate his commitment to that principle, O’Leary produced two pens from his pocket, both stolen from hotel rooms. He stays in budget hotels. He always flies Ryanair, startling fellow passengers by taking their tickets at the gate and by boarding the plane last, where he invariably gets a middle seat.

O’Leary does not sit in an executive lounge, has no BlackBerry and does not use e-mail because, he says, “I couldn’t be bothered with all the crud and the crap and the rubbish that gets sent to you on e-mails.”

He began working at Ryanair in 1988, became its deputy chief executive in 1994 and its chief executive in 1997. His personal fortune is estimated to be about $500 million.

“He’s one of the few home-grown successes in corporate Ireland in the last 40 years whose success has been sustainable,” Gill said.

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